Newscasts - 'Many slip-ups' possible for AI stocks, investor says
23/01/2026 21:45
Click the following link to watch video: https://share.newscasts.refinitiv.com/link?entryId=1_so657o9b&referenceId=tag:reuters.com,2026:newsml_RW945123012026RP1_930&pageId=Newscasts Source: 'Reuters - Business videos' Description: Brad Conger, chief investment officer at Hirtle Callaghan, says enthusiasm around artificial intelligence stocks may be running ahead of their underlying business models and highlighted several challenges facing AI companies that could slow their momentum. Short Link: https://lseg.group/4r2nGDG Video Transcript: We are underweight the Mag Seven stocks, and it's predicated on the belief that although there is a lot of demand for compute, a lot of it is driven by companies that rely on venture funding. So, for example, OpenAI has committed to spend $1.4 trillion over the next five years in compute and yet they're losing $20 billion this year, $30 billion next year, $40 billion in 2027, and that bucket has to be filled constantly or replenished by the venture capital market. And so, our contention is that there are many slip ups that can happen with the AI stocks. Energy availability, community resistance. Some of these data centers will basically face a local backlash to their permitting. The underlying business case, for example, in other words, how much will people really spend for a large language model? There are now six or seven that are at the frontier of capability. 95% of the users aren't paying anything for them. Can you really convince people to buy something that they've always achieved for free? And then there are the Chinese alternatives, which are cheaper and open source. So, MiniMax, which is one of the Chinese competitors, offers a very capable large language model to consumers for $3 a month. It's going to be hard to convince people to pay $20 or $200 a month for Claude and ChatGPT when there's a $3 competitor that's 90% as good.